Pakistani o/n rates ease; rupee weaker, stocks down

Thursday, December 24, 2009
KARACHI, Dec 23 - Pakistan's short-term money rates ended at the lowest level on Wednesday amid increased liquidity, but dealers said trade was thin in the run-up to the end of the year.
Overnight call rates ended at 9.50 percent, down from Tuesday's close of 10.00 percent.
'Rates are expected to hover around current levels as there are scheduled inflows or outflows before Saturday,' said a brokerage dealer.
The range for money market overnight repo rates is from 9.50 percent to 12.50 percent.
The next outflow was scheduled for Saturday of 120 billion rupees, dealers said.
Dealers said the rupee was almost flat on Wednesday but was expected to weaken because of higher dollar demand for import payments, especially of oil.
The rupee closed at 84.32/42 to the dollar compared with Tuesday's close of 84.30/35. It was traded at a record low of 84.55 to the dollar on Dec. 16, dealers said.
This compared with the previous record low of 84.40 set on Oct 17, 2008, a month before Pakistan secured an International Monetary Fund emergency loan of $7.6 billion to help avert a balance of payments crisis and shore up reserves.
Demand for dollars to pay for oil has increased since last week when commercial banks were made to provide foreign currency for imports of crude oil under a central bank ruling.
As part of Pakistan's commitments under the IMF programme, the central bank has stopped providing foreign currency for imports for crude oil.
The State Bank of Pakistan stopped providing foreign exchange for furnace oil in February, and for diesel and other refined products in August.
The rupee has weakened 6.19 percent this year after losing 22.12 percent last year.
Dealers said a positive trigger for the currency could be approval of the fourth tranche of the IMF loan. IMF board members are scheduled to discuss Pakistan performance on Wednesday.
Stocks ended lower as investors booked profits at higher levels after the main index rose for two consecutive trading sessions, dealers said.
The Karachi Stock Exchange benchmark 100-share index <.KSE> ended 29.55 points, or 0.32 percent, lower at 9,302.92 on turnover of 87.88 million shares.
'Investors are a bit hesitant because of the security situation and some political uncertainty,' said Asad Iqbal, managing director at Ismail Iqbal Securities Ltd. (For more Reuters coverage of Afghanistan and Pakistan, see: http://www.reuters.com/news/globalcoverage/afghanistanpakistan)